End of Iran’s sanctions creates opportunity for Spain

The Spanish foreign minister released a statement on 18 January 2016 announcing that Spain and Iran have been discussing the construction of an Iranian owned oil refinery at the Gibraltar strait, very shortly after sanctions were lifted against the economically isolated Islamic republic.

Foreign Minister Jose Manuel Garcia-Margallo said he was hopeful that the planned refinery, which would be constructed in the southern port city of Algeciras with local Spanish firms, would be the beginning of many promising deals between the two nations.

The US and EU revoked sanctions against Iran on 16 Jan 2016, that had cut Iran’s oil exports by almost 50% in comparison to its pre-sanctions 2011 peak, in return for Tehran complying with a deal to curb its nuclear ambitions.

Iran's Deputy Oil Minister, Abbas Kazemi, said in November 2015 that after the sanctions had been lifted, Iran’s policy would focus on buying or investing in overseas oil refineries in order to significantly boost its oil output. Shortly following the lift in its ban, Iran ordered a rise of 500 000 bpd in oil output, as reported by Iranian official media.

Margallo told reporters in Brussels that a restructure of the entire Iranian energy industry would be needed following its return to the international economy, and Spain was a good ally to assist with such restructuring.

"What we see here is a new chance for the region to stabilise and for our companies to secure good business opportunities," Margallo said, before meeting with EU foreign ministers.

"Our political relationship with Iran is very good because we moved faster than other countries and are now very well placed for future business," said Margallo, who has been investigating opportunities in a post-sanction Iran since a visit in 2014, following his visit he has often spoken favourably about achieving a closer dialogue.

Margallo also added that the construction of an Iranian refinery in Algeciras would provide a region suffering from the highest unemployment rate in Spain, an opportunity to finally boost employment and improve quality of life.

Kazemi has previously said that the possibility of a facility would refine around 200 000 bpd, a fair match for the Gibraltar-San Roque refinery, which is currently Spain's largest facility, and owned by the Spanish firm Cepsa. Neither Kazemi or Margallo have released which Spanish firms would be involved in the project.